Use the Information Below to Answer the Following Question(s)

question 29

Multiple Choice

Use the information below to answer the following question(s) .
The following information pertains to Hepburn Company:

Cash is collected from customers in the following manner:
- Month of sale 30%
- Month following the sale 70%
40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.
Labour costs are 20% of sales. Other operating costs are $30,000 per month (including $8,000 of depreciation) . Both of these are paid in the month incurred. The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.
-What is the ending cash balance for March after borrowing, if required?

• A) $6,400
• B) $5,600
• C) $6,000
• D) $6,600

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Definitions:

Tying Contracts

Agreements where the sale of one product is conditional on the purchase of another product.

Treated

Subjected to a process or treatment, in the context of material, data, or medical treatment, with the aim of changing its properties or outcomes.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on the willingness to pay.